New Jersey's handling of Superstorm Sandy funds questioned

Gov. Chris Christie town hall

Mel Evans / Associated Press

New Jersey Gov. Chris Christie takes questions at a town hall meeting last week in Toms River, N.J. “I never promised you, nor would I, that this was going to be mistake-free,” he said of delivering aid after Superstorm Sandy.

New Jersey Gov. Chris Christie takes questions at a town hall meeting last week in Toms River, N.J. “I never promised you, nor would I, that this was going to be mistake-free,” he said of delivering aid after Superstorm Sandy. (Mel Evans / Associated Press)

Joseph Tanfani

POMONA, N.J. — His state wrecked and reeling from Superstorm Sandy, Chris Christie made himself the face of New Jersey's comeback effort with a take-charge tour de force that became a cornerstone of an expected run for president.

But the made-for-campaign-ads story of resurrection is now riddled with failures: poor performance by contractors, accusations of insider deals and increasing frustration from homeowners still waiting for recovery funds. In the aftermath of the George Washington Bridge scandal, Gov. Christie and top members of his administration also face questions about whether he and his aides used disaster relief funds to reward friends and punish enemies.

At a recent public hearing on Sandy recovery, Jane Peltonen ripped into state officials: Sixteen months after the storm, she said, her Brigantine home is still in shambles and financial assistance from the state has not arrived. Once encouraged by Christie's pledges of quick help, she now has nothing but angry words for him.

"A lot of us are still waiting," she said during the often-raucous hearing. "Right now it is a black eye on our state. Where's the governor? I think maybe he's in Chicago, or maybe Texas. Do you really think he's going to make sure we get help?"

In fact, Christie was in Chicago that day, wooing big donors in his role as chairman of the Republican Governors Assn.

At town hall meetings crowded with Sandy victims, Christie has acknowledged the recovery delays, but said much of the blame lay elsewhere — in poor policies, insufficient funding and "immeasurable" red tape devised by federal agencies. He defended his administration's overall handling of the recovery.

"I never promised you, nor would I, that this was going to be mistake-free," Christie said in Toms River recently.

The storm made landfall near Atlantic City on Oct. 29, 2012, leaving some waterfront towns underwater, scattering houses and businesses on the coastline and causing, by the state's count, $36.9 billion in damage. More than 325,000 homes were ravaged.

Questions about the recovery effort began almost as soon as New Jersey got its first $1.8-billion federal grant — money that state officials had a good deal of discretion on how to spend.

Early on, it spent $25 million on a promotion campaign aimed at salvaging last summer's tourism season on the Jersey shore; the "Stronger Than the Storm" television ads featuring Christie and his family ran months before he stood for reelection. The inspector general for the Department of Housing and Urban Development is examining whether the spending was proper.

An additional $139 million was poured into high-rises for senior citizens and other affordable-housing projects in the nine most damaged counties. But some of the projects were in towns that escaped the storm relatively unscathed — like Belleville, where developers received $10 million to put up a senior housing project.

Christie's administration has defended the strategy, saying it tried to aid victims quickly by pushing money into shovel-ready projects near the damaged areas.

All told, the state says it has committed $983 million of the money — but has so far actually disbursed much less, about $227 million.

Federal prosecutors are looking into assertions by Hoboken Mayor Dawn Zimmer that politics played a role in where the money was spent. She says that top officials in the Christie administration told her that her town would have more luck getting recovery funds if she would support a redevelopment project tied to Christie's allies. The officials she named, including Lt. Gov. Kim Guadagno, have denied Zimmer's claim.

For many residents, the biggest source of pain has been the Homeowner Reconstruction, Rehabilitation, Elevation and Mitigation program. Set up with $600 million of the $1.8-billion federal grant, it was to give individual homeowners up to $150,000 each to cover the gap between insurance payments and the cost of rebuilding their houses. New Jersey says it has sent letters to more than 5,000 homeowners promising funds, but has spent only $30 million so far.

Last May, at a cost of $68 million for three years, the state hired Hammerman & Gainer Inc. of Louisiana, a firm that specializes in disaster recovery services, to handle applications from homeowners. One of the subcontractors on the proposal was the New Jersey law firm of an influential Christie supporter, former Republican county Chairman Glenn Paulsen. The same day the contract took effect, the law firm contributed $25,000 to the Republican Governors Assn., the political action committee now chaired by Christie.

Criticism flew almost as soon as the program began taking applications. Homeowners complained of lost paperwork and of having to navigate a bewildering maze of requirements with little help from the workers in the recovery centers, who were hired through temp agencies.

"You'd see these kids who looked like they worked in McDonald's the week before," said Tom Largey, who has been battling to get aid to help rebuild his elderly parents' home in Sea Bright.

Last December, Hammerman & Gainer and the state quietly parted ways after the state had paid it more than $35.7 million. The company says it is owed an additional $21.2 million; if the state agrees, it will have paid the company nearly the entire three-year contract amount for just eight months' work.

In an arbitration filing, the firm said the state kept giving it extra work and promising to pay more later. One state official involved in the recovery effort said the state, in its rush to get the contractors working, wrote sloppy contracts without strong performance standards.

The state Department of Community Affairs is now running the program with help from another firm, ICF International of Virginia. ICF received a no-bid contract to complete the grant program, which runs through 2015, for $36.5 million.

Both Hammerman & Gainer and ICF were contractors in a similar $10-billion program that became notorious for mistakes and long delays in handing out funds in Louisiana after Hurricane Katrina. New Jersey officials said they had heard of the Louisiana woes before signing the contracts, but didn't consider them disqualifying. They said they selected Hammerman & Gainer because its proposal came in at $127 million less than the only other bid.

An ICF spokesman said the company "actually over-delivered" in its Katrina performance and that audits found no wrongdoing. Hammerman & Gainer did not respond to requests for comment.

In New Jersey, the Fair Share Housing Center, an affordable housing advocacy group, recently released a study showing that 80% of homeowners rejected by Hammerman & Gainer were found eligible for aid after they filed appeals. Center official Kevin Walsh said many of those applicants never found out why their original requests for aid were denied.

"It's just a complete unknown to most people who have dealt with the process," he said. "When you don't have any rules you have to make it up as you go along."

At a Capitol Hill hearing on Wednesday, U.S. Sen. Robert Menendez (D-N.J.) blamed the Christie administration for problems like botched paperwork, lengthy delays and a lack of transparency. In a reference to Christie's criticism of federal rules, he said it "was time to stop finger-pointing and get the job done."

"People simply feel the major state programs are not being run fairly or competently," said Menendez, chairman of the Subcommittee on Housing, Transportation and Community Development. At the hearing, Housing and Urban Development Secretary Shaun Donovan said his agency was investigating whether the program, which featured a botched Spanish-language website, unfairly denied access to minorities, and was pressing the state to make improvements.

In defending their work, Christie and other top officials in his administration say New Jersey's record is better than New York's when it comes to delivering aid to homeowners: One study by a housing group found that under a similar program in New York City, only 110 of nearly 20,000 applicants had received an award.

For the victims, that is little solace. Jeanine Gross of Port Monmouth, a medical office manager, waited in line at her town's hearing to see administration officials, clutching a sheaf of paperwork about her wrecked home.

"They give you no information at all. All they tell you is you're still on the waiting list," she said.

Without a grant, she added, she has come to believe she's "going to have to move away from here."